Joint cost allocations are inappropriate when:
I. Deciding whether to process a product beyond the split-off point
II. Preparing external financial reports
III. Evaluating the performance of individual project managers
A) I and II only
B) I and III only
C) II and III only
D) I, II, and III

Question

Quizplus · Accepted Answer

I. Joint cost allocations are not relevant for decisions regarding further processing beyond the split-off point because such decisions should be based on incremental costs and revenues associated with the additional processing.III. Using joint cost allocations to evaluate the performance of individual project managers can be misleading because these costs do not change with the decisions made by the managers at or after the split-off point.

Joint Cost Allocations Are Inappropriate When